The following data pertains to the operations of Knight Kiters for 2021:

a Calculate bad debt expense for 2021 under the direct write-off method and the allowance method.

b Calculate profit or loss under both methods (assume a tax rate of 25 per cent).

c As a reporting entity does Knight Kiters have the option of which method to use under Australian Accounting Standards?

$925000 135000 Net credit sales Net operating income (before bad debt expense) Write-offs of uncollectible accounts Estimated uncollectible percentage of net credit sales 17500 2%